rethink possible. captioning funded by cbs and ford-- built for the road ahead. >> simon: the entire case for invading iraq was based on one man's claim that saddam had biological weapons. that's right-- one man. an iraqi defector code named "curve ball," who no american has ever questioned. you left iraq with the idea of destroying saddam hussein. >> exactly. >> simon: tonight, you'll hear from him, and probably wonder how anyone could ever have believed a word he said. >> gupta: you're watching a surprise early morning raid--

police in riot gear looking for counterfeit prescription drugs. and they found them everywhere. the police were led here by someone you wouldn't expect-- john clark from the american drug company, pfizer. this stuff is going to get into people's medicine cabinets? >> unfortunately, yes. >> gupta: counterfeit drugs are ending up in millions of american homes. at this postal facility, the sheer volume of packages of suspicious drugs is staggering. and this is just from one day. >> everybody, one clap if you're with me. two claps. stomp, stomp, clap. on your marks, get set, go. >> couric: tonight, we're going to show you a bold new experiment in public education-- a charter school that is paying its teachers $125,000 a year, more than double the national average. when you first saw the ad that said the starting salary would be $125,000, what did you think? >> i thought too good to be true.

i said this is like some wacko cult or something. ( laughter ) >> i'm steve kroft. >> i'm lesley stahl. >> i'm scott pelley. >> i'm bob simon. >> i'm morley safer. >> i'm katie couric. those stories tonight on "60 minutes." cbs money watch update. >> good evening. new estimateses put insured losseses from the earthquake in japan at $35 billion one of the most expensive catastrophes in history. gas prices rose 6 cents in a week, 43 in a month to an average of 3.56 a gallon. and battle l.a. con the weekend backs office. i'm russ mitchell, cbs news.

>> simon: next saturday will mark the eighth anniversary of america's invasion of iraq. and after all this time, questions still remain as to why the united states launched the war in the first place. the bush administration said it was because of saddam hussein's weapons of mass destruction. but there were no such weapons. so, how did u.s. intelligence get it so wrong? incredibly, it was all because of one man, an iraqi defector code named "curve ball," who spun a web of lies which convinced america's top spies. his allegations became the crown jewel of the case colin powell made to the united nations before the war.

three years ago, we told you part of this story. but we were missing one crucial element-- curve ball, himself. we couldn't find him. well, finally, we did. so tonight, we're going to introduce you to the man and ask you to ponder how anyone could ever have believed one word he said. do you think you helped get saddam hussein out of iraq? >> rafid alwan: yes. exactly. >> simon: and here he is, the iraqi informer who became known as curve ball. his real name is rafid alwan, a 44-year-old chemical engineer who says he had a mission. so you left iraq with the idea of destroying saddam hussein? >> alwan: uh... exactly. >> simon: we sat down with curve ball in europe. we agreed not to reveal exactly where. what made him decide to talk to us? we still don't know.

but he was unapologetic, hard to pin down, and really nervous... >> alwan: one minute, please. >> simon: ...not sure how much he could reveal about how he fooled western intelligence services into believing that iraq had a secret program to brew mobile biological weapons. >> alwan: i plan for this for long time. >> simon: he came up with the plan after he escaped from iraq in the late 1990s. but curiously, instead of taking his story to a western embassy, which is what defectors usually do, he just drifted from one country to another. you went to jordan, libya. >> alwan: yes. >> simon: morocco? >> alwan: yes. >> simon: spain? >> alwan: yes. >> simon: belgium? >> alwan: yes. >> simon: to morocco again? >> alwan: yes. >> simon: and then to germany? >> alwan: yes. >> simon: that's a lot of traveling? >> alwan: yes. ( laughs ) >> simon: how did you get the money to do... do that traveling? >> alwan: some person in belgium. he's my neighbor in iraq, and he

give me also a lot of money. >> simon: wow, you've got nice neighbors. alwan actually wanted to go to england, where he says he hoped to lure the british into thinking saddam had biological weapons. in november 1999, he took a train from belgium to germany, where he was to contact a man who would smuggle him into britain. the meeting point-- the grand cathedral in cologne. he waited and waited. the smuggler never showed. the police found you? >> alwan: yes. and i don't have passport, i don't have identity card, i don't have visa. must go to the police station. >> simon: alwan was taken to this refugee center outside nuremburg, where he was visited by the b.n.d., german intelligence. at first, alwan told the truth to his interrogators. >> alwan: i say i am chemical engineer. i... >> simon: you said you were a chemical engineer. >> alwan: yes. this my... >> simon: which was the truth. >> alwan: yes. >> simon: he then mixed a few facts with a heavy dose of

fiction. he told german intelligence that in 1995, he had been made a director at this site outside baghdad called djerf al nadaf. the iraqis said it was a seed purification plant. but alwan told the germans he was present when mobile biological weapons were being made there. we've diagrammed how alwan told the germans that specially- equipped trucks made their way to one end of warehouse one, entered doors there, hooked up to hoses and pumps, and brewed biological agents. smaller vehicles then took the finished product away, exiting hidden doors at the other end. the germans were so staggered by alwan's story, they hid their prize source in this hotel in the town of erlangen. he was given the code name "curve ball," and was interrogated intensively for most of 2000. the germans told u.s. intelligence that curve ball

didn't want to meet with americans. so all washington got were summaries of his debriefings. but the reports were quite enough to make american intelligence analysts stand up and take notice. >> charles duelfer: when you look at the written reports, and there are about 100 of them, you get a sense of someone who is there. it's convincing. >> simon: charles duelfer had been a leader of the u.n. inspections team during the 1990s. after the war began, the cia sent him to iraq to look for those weapons of mass destruction. duelfer has read the curve ball reports. >> duelfer: it would be difficult for someone to read those and stand up and say, "none of this can possibly be true." >> simon: so, in other words, not only german intelligence, but the c.i.a. wasn't making the mistake, at first, to take this very seriously. >> duelfer: well, the c.i.a. would have been... would have been at fault to... to not take it very seriously. >> simon: saddam had produced biological weapons, until he was

caught by u.n. inspectors after the first gulf war. curve ball's information became especially alluring because, in december 1998, saddam kicked out the u.n. weapons inspectors, leaving c.i.a. inboxes empty. >> duelfer: so, when the u.n. inspectors left, they were left blind. >> simon: nothing there. >> duelfer: nothing there. and all of a sudden, they've got to make assessments and predictions based on no information. >> simon: and then comes along curve ball. >> duelfer: along comes curve ball. and curve ball spun a tale, and he was telling everyone exactly what they expected to hear. >> simon: so curve ball was sowing his seeds in a very fertile field. >> duelfer: precisely. >> simon: the most alarming part of his story was something he said happened at djerf al nadaf in 1998-- a biological accident that killed 12 technicians and turned their skin black. you did tell the germans that there had been an accident...

>> alwan: i told... >> simon: ...at djerf al nadaf? >> alwan: i told that. i told that. i told you exactly. i told this story. >> simon: c.i.a. analysts also found curve ball credible because he named names. he said that, while he was working at djerf al nadaf, dr. basil al-sa'ati, a noted iraqi scientist, was the senior official in charge of the secret biological weapons program. american intelligence agents found dr. basil outside of iraq and confronted him about the biological program. >> dr. basil al-sa'ati: they were asking me what was the program, and how far did... did we go? >> simon: they told you they believed that you were in charge of the program? >> al-sa'ati: that i was in charge. and i should tell them what was the program, which, i said, there was nothing like such a program. i had the feeling that they thought i was lying. so, to encourage me to tell the truth is to give me some... you know, some money. >> simon: how much? >> al-sa'ati: around $50,000, i would say. >> simon: so the americans offered you $50,000 for you to tell the truth.

>> al-sa'ati: it was to encourage me to say what they thought it was the truth. >> simon: dr. basil wouldn't take the money. in germany, after months of interrogation, curve ball became less cooperative. he refused to talk to intelligence agents for nearly a year. he needed work and got a job in erlangen-- here, at burger king. the cia didn't know about his new career or much else about him. >> tyler drumheller: we didn't know any of that stuff, beginning with we had never met with him, and didn't even know his name or what he did. >> simon: tyler drumheller was the c.i.a.'s european division chief at the time. he says when doubts were raised inside the agency over curve ball, the skeptics were shouted down. >> drumheller: there were meetings that were so angry and so violent. you know, people cursing at each other, and yelling, you know, "how dare you question us?" >> simon: curve ball had already provided what the bush administration needed to beat

the war drums against saddam hussein. >> duelfer: he offered the best rationale for the course of action that the white house elected to take. the fundamental argument on weapons of mass destruction did pivot on this guy, curve ball. >> simon: to make that argument before the world, president bush selected the most trusted man in his administration, secretary of state colin powell. could secretary powell have given his speech to the united nations that he did give if there hadn't been a curve ball? >> drumheller: i don't think so. there would have been nothing else to talk about, except things that had been talked about a million times before. >> colin powell: what we're giving you are facts and conclusions based on solid intelligence. >> simon: on february 5, 2003, powell stated with no qualifications that saddam hussein had mobile biological weapons. the only source for that? a man no american had ever questioned, curve ball. >> powell: the source was an

eyewitness, an iraqi chemical engineer who supervised one of these facilities. he actually was present during biological agent production runs. he was also at the site when an accident occurred in 1998. 12 technicians died from exposure to biological agents. >> simon: prominently displayed were models of the mobile trucks curve ball had sketched to the germans. curve ball now admits it was just that-- a sketch, a product of his fertile imagination. did you see trucks carrying biological weapons... >> alwan: no. >> simon: ...going inside and outside of djerf al nadaf... >> alwan: no. >> simon: ...after 1995? >> alwan: no, i told you no. i told you exactly, no. >> simon: and that biological accident at djerf al nadaf curve ball said he witnessed? the accident which killed 12 people and blackened their skin? it never happened. and it turns out djerf al nadaf really was a seed purification plant. curve ball, who worked there

procuring parts, wasn't even at the plant when he said the accident happened in 1998. how long did you work at djerf al nadaf? >> alwan: four month. >> simon: four months? >> alwan: yes. >> simon: when did you leave djerf al nadaf? >> alwan: um, i think in 1994. in 1994. >> simon: 1994? >> alwan: yes. >> simon: his tale, which helped launch the war, he now acknowledges, was one big lie. the story that you said helped remove saddam hussein wasn't true, was it? >> alwan: no, not true. >> simon: but there's still one maddening mystery-- how did this low-level chemical engineer, seen here at a 1993 baghdad wedding, come up with such a detailed story? did someone put him up to it? did you make it up yourself? >> alwan: yes. >> simon: all by yourself? >> alwan: yes. >> simon: curve ball then hinted

that someone may have helped him, but exactly who? he just wouldn't give us a straight answer. but he did tell us he considers himself a hero for the important role he played in ousting saddam. he even ran for a seat in the iraqi parliament last march. he got creamed. perhaps the voters didn't see him as the hero he claimed to be. we showed excerpts of our interview to former c.i.a. senior official tyler drumheller, now a consultant for "60 minutes." curve ball insists he did all this to get saddam out of iraq. you believe him? >> drumheller: no. i think he probably believes that himself now. i strongly feel that he did it at the time to... to be able to stay in germany. >> simon: if that's the case, he succeeded. today, curve ball and his family have german passports and live in the southern part of the country. so now, he apparently feels safe enough to tell his story. at least part of it. as our interview entered its

second hour, we pressed him for the whole story, the full truth. >> alwan: tell the truth is not for me. >> simon: telling the truth is not for you? >> alwan: you can't ask me tell the truth. >> simon: i cannot ask you to tell the truth? >> alwan: okay. next time. >> simon: let's finish this time. take a rest, have a cigarette. and with that, rafid alwan, the man who pulled off one of the deadliest con jobs in history, disappeared back into the shadows. during its first year, the humpback calf and its mother are almost inseparable. she lifts her calf to its first breath of air, then protects it on the long journey

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>> gupta: there is a new front in the war on drugs. it's not the kind of drugs you might think. we're not talking about cocaine, heroin, or methamphetamines. this is about drugs that could wind up in your medicine cabinet-- counterfeit prescription drugs, made with cheaper, sometimes even dangerous ingredients such as highway paint, floor wax, boric acid. criminal counterfeiters will go to any length to evade detection. we found a shadowy network of criminals with made-up names, constantly changing locations, and lots and lots of money-- an estimated $75 billion a year. you're watching a surprise early morning raid in lima, peru. 200 police in riot gear storming an indoor market. their target: counterfeit prescription drugs. and they found them everywhere. there were crude packaging machines and silk screens with imprints of actual name brand

drugs. hundreds of thousands of counterfeit medicines collected from that raid were traced back to this house. through a back door and down a narrow hallway, we found a tiny, squalid patio that was actually a fake drug factory, turning out an astonishing number of counterfeit medications. peruvian police were led here by someone you wouldn't expect-- john clark, from the american drug company pfizer. i'm looking at this pan with these pills in it. this stuff is going to get into people's medicine cabinets around the world? >> john clark: unfortunately, yes. >> gupta: clark heads up a global security team assembled by pfizer-- former f.b.i., homeland security, and narcotics agents who work with local police to track down criminals around the world. counterfeit operations like these are costing drug companies millions of dollars a year. this has "pfizer" written all over it. >> clark: and it's even got the newer pfizer emblem with the little slant on it and stuff. i mean, from the packaging, you'd never know. >> gupta: here, they discovered

about two dozen medicines including antibiotics, seizure, blood pressure, and pain medications. we're in the middle of this very primitive courtyard. this doesn't look like any kind of facility that you'd expect at all. does this surprise you? >> clark: no. no, unfortunately. the quantity of counterfeits you're seeing is... is phenomenal. the conditions are just abysmal. and if the consumer ever realized that products that they're putting inside their bodies come from this-- from dirty water, drying out in the open under a heat lamp, insects and everything else getting into it, contaminants being, you know, brought into the... the equation and stuff, i think they'd be horrified. >> gupta: according to john clark, counterfeit pfizer drugs, many from disgusting conditions like this, have made their way to pharmacies and hospitals in at least 46 different countries, including england, canada, and the united states. so right now, there are people around the world taking medications to... to save their own lives who are simply taking the wrong thing, and they don't

even know it. >> clark: yes, absolutely. if you have any concerns, you should go to your doctor, should go to your pharmacist. if the pill dissolves differently, if it tastes bitter or differently... >> gupta: john, you know, i... i'm a doctor. i looked at these medicines today. i wouldn't be able to tell if they were fake or not. and that... i'm the person they're going to ask. >> clark: right, right. >> gupta: i don't know the answer. how are other people going to know the answer? >> clark: next step is every pharmaceutical company will take it back, do the test, and then find out of it's counterfeit, how it got there, and then try to get it off the market immediately. >> simon: the pills from peru were sent here to pfizer's testing facility in groton, connecticut. sometimes, counterfeits may have a percentage of the correct active ingredients, but not when it came to this antibiotic or this ulcer medicine. >> sucrose, confectioners sugar, and maple sugar. >> simon: sugar, and also chalk. imagine taking a medication to treat a serious illness with those ingredients. >> kumar kibble: people can die. people can be seriously injured, but people can also die. >> gupta: kumar kibble, deputy director at immigrations and

customs enforcement, or "ice," is charged with protecting our borders from illicit trafficking. over the past few years, his attention has increasingly focused on counterfeit drugs. in the scheme of things, how big a threat are fake drugs? >> kibble: fake drugs are a big threat, and it is an exploding threat. you actually have traditional criminal groups that may have engaged in traditional drug trafficking, and they realize, you know, "i can make just as much money making, you know, tens of dollars on a pill that i manufacture for pennies," and have very little exposure in terms of... in terms of prosecution. >> gupta: so, you're talking about a very low risk, very high reward, potentially tons of money. >> kibble: yeah, absolutely. when you think about that some of these pills can be manufactured, you know, for 40 cents and sold for $18 or $20, i mean, just think of that profit potential. i mean, it's just... it's in... it's insane. this looks like a legitimate web site. >> gupta: kibble tracks counterfeits from their source in clandestine labs to the

united states, where they're typically sold through rogue internet sites, often posing as legitimate pharmacies. 36 million americans are estimated to have bought their medicines from these sites, many searching for quality drugs at a better price. some sites pretend to be from canada, because canada is known for safe, inexpensive medicines. kibble caught this israeli counterfeiter on a hidden camera admitting that very scheme. >> these are all your internet web sites? is that really from canada? >> no. ( laughter ) >> gupta: that same counterfeiter also told undercover investigators of another decidedly low-tech way of smuggling hundreds of thousands of pills into the united states. he simply had them dropped in the mail. at the postal service facility at jfk airport, the sheer volume of packages of counterfeit and suspicious drugs coming into the country is staggering. after x-rays... >> if you look closely here, you see little round objects that don't belong. >> gupta: ... customs puts aside thousands for inspection.

that's every one of these bins. and this is just from one day. >> david elder: our resources certainly haven't kept pace with the volume of products coming into the country or the increase in volume. >> gupta: the food and drug administration's david elder told us that when they do find a fake drug, they're often forced to ship it back to the sender. on this day, they found pills and vials from india posing as legitimate thyroid, fertility and hypertension medication. they had to send it all back. that sounds crazy. why not go after this person? >> elder: we don't have the authority to actually destroy this on site. this product could very well come back into the country through a different mail facility-- maybe it gets through, maybe it gets stopped. >> gupta: but they're banking on, one of these times, you're going to miss. >> elder: yeah, i think they are. >> gupta: and many of these fakes are so sophisticated, even investigators at this f.d.a. lab in cincinnati couldn't distinguish which bottle of zyprexa is fake with the naked

eye. using a forensic light source, they can test the ink, and the label that lights up-- that's the real one. this fake lipitor pill looks so authentic, they had to superimpose a diagram of an actual pill to see that the number 20 did not match up. >> with the naked eye, you could not see this. >> balbir bhogal: as they say in india, you can manufacture anything. there's no limit. >> gupta: balbir bhogal was recently arrested in madison, wisconsin, for allegedly trafficking counterfeit drugs. he's also accused of providing millions of anti-anxiety pills from india to a web site operator for a site with a common, seemingly harmless name. >> bhogal: he was running a internet pharmacy, which is... actually, i discovered recently that it's web site-- easy meds for you. >> gupta: easy meds for you? >> bhogal: meds for you, yes. he had lots and lots of suppliers. >> gupta: you've never met him? >> bhogal: never met him. >> gupta: it's a total virtual world? >> bhogal: absolutely. never met him, and i didn't even know... believe his name was real or not. >> gupta: bhogal maintains his innocence, and claims he was only supplying anti-anxiety

medicines with the proper formulation and thought it was for the asian market. the government says he knew the pills were illegally coming into the united states. were you worried at all about these medications? where they were going to end up? >> bhogal: never looked at that issue at all. >> gupta: do you wish you had? >> bhogal: yes. >> gupta: what is even more alarming is these counterfeit medications are not just being sold on the internet. they are also making their way into mainstream pharmacies and hospitals. fda commissioner margaret hamburg says that while the vast majority of our drug supply is safe, there's reason for concern. >> margaret hamburg: you know, we don't really know the full dimensions of the problem. but we do know that, in certain countries, somewhere between 30% and 50% of... of really important drugs for health are, in fact, counterfeit. >> gupta: how does all this increase in counterfeit drugs around the world affect the united states? >> hamburg: just consider that 40% of drugs taken in this country come from other countries.

80% of the active pharmaceutical ingredients in drugs taken in this country actually come from other countries. >> gupta: even if the prescription medications are manufactured in the united states, the raw ingredients often come from overseas, through a complicated web of suppliers and distributors, and are increasingly vulnerable to counterfeiting. that is what happened in 2008, with the blood thinner heparin, which millions of americans rely on to prevent blood clots. little did the manufacturer, baxter international, know that one of the raw ingredients from china was counterfeit. how many people were affected by this? >> hamburg: in this country, a little over 80 people actually died from contaminated heparin. >> gupta: baxter says the number of deaths is closer to four or five, but everyone agrees it's difficult to know the exact number. nurse colleen hubley says, at her dialysis center in toledo, ohio, she saw one patient have cardiac arrest, and others with strange symptoms after receiving heparin. >> colleen hubley: having hypotension, diarrhea, vomiting.

i even had another patient that stated to me, you know, "what is going on around here?" >> gupta: had you ever seen anything like this? >> hubley: no. >> gupta: and then she says she saw the same symptoms in her own family. she says her husband, randy, and her mother-in-law-- both regular users of heparin due to chronic kidney disease-- had bad reactions and died within a few days. baxter, which is being sued by colleen hubley and others, disputes that, and says the serious underlying medical conditions of her family and patients "much more likely caused their deaths." you lost one of your patients, your mother-in-law, and your husband, randy, within a month or so. >> hubley: gone. >> gupta: colleen hubley says she never imagined heparin could be counterfeit. you really counted on that heparin being perfectly fine. >> hubley: yes, we did. and i don't know if, in my nursing career, i'll ever take anything for granted again. >> gupta: baxter's c.e.o. told

congress that he deeply regretted what had happened. the company told us in a letter that the counterfeit ingredient so closely mimicked heparin that "it was able to evade the quality control systems and regulatory oversight of more than a dozen companies and nearly a dozen countries." three years later, f.d.a. commissioner hamburg told us they're still struggling to get to the bottom of it. do you know who... who perpetrated this crime, with the heparin contamination, or exactly how they did it? >> hamburg: we do not know the answer to that question. >> gupta: despite what happened with heparin, most of the ingredients in our medicines today still come from other countries, including china and india, which have notoriously weak regulatory systems. the fda only inspects about 12% of overseas facilities a year. everyone's concerned, it's hard to regulate, it's potentially problematic, even deadly. why does it continue to happen? >> hamburg: i think that we live in a globalized world. and components of all kinds of products are going to come from all over the world.

>> gupta: it's cheaper over there. it's economics. >> hamburg: it is economics for the companies. i do believe that we can do an enormous amount to strengthen the safety of the supply chain. >> gupta: drug companies say they already have their own systems in place to protect their supply chains. but they also have to worry about those clandestine labs, like the one we saw in peru, which are popping up all around the world, according to pfizer's john clark. >> clark: and if there are no consequences for those doing this, then there's no disincentive not to just go back and do it again once you're caught. i mean, the profit on illegal medicines is just phenomenal. >> gupta: and catching them isn't easy. at the lab in peru, police arrested a messenger, but the kingpin of the counterfeit drug operation had slipped away. what do you think, john-- they going to find this guy? >> clark: they'll be lucky if they do. [ male announcer ] when the world stopped lending, the search for capital led to a trusted name. prudential continued to provide capital

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>> couric: with state after state confronting massive budget problems, several governors have been looking to extract whatever they can from public employees like teachers, going after benefits packages and guaranteed job security that unions have won for them. but would teachers be willing to give up those protections for a chance to earn a lot more money? there's a school in new york city tyit's trying to prove just that. tonight, we're going to show you a bold new experiment in public education called "tep," which stands for "the equity project," a charter school that's publicly funded but privately run. it's offering its teachers $125,000 a year, more than double the national average. tep aims to prove that attracting the best and the

brightest teachers, and holding them accountable for results, is the essential ingredient to a school's success. could this school become a national model for the future of public education? that's the $125,000 question. you pay your teachers $125,000 a year, which is a lot of money for a teacher in this country. why? >> zeke vanderhoek: because they're worth it, because teachers are the key, and if we can pay them this with the existing dollars, why aren't we doing it? >> couric: they're doing it at tep because 34-year-old zeke vanderhoek, a former teacher who is the school's founder and principal, gets to decide who he hires and how much he pays them. how do you think these high salaries will impact student achievement? >> vanderhoek: i don't think paying people more makes them a better teacher. you take a mediocre teacher, you double their salary, nothing's going to change. so, if you want to attract and

retain talent, you have to pay for it. >> rhena jasey: four-letter word. spell it. >> r-o-o-f. >> vanderhoek: and that is ultimately how student achievement will be impacted. >> jasey: everybody, all around. nice job. silent applause. >> couric: we've been following the school since it opened its doors a year and a half ago in washington heights, a poor, mostly hispanic neighborhood in upper manhattan. there are currently 247 fifth and sixth graders and 15 teachers. classes will eventually run through the eighth grade. how are the teachers here different than, say, teachers in other public schools? >> vanderhoek: they're not. there are great teachers in almost every public school in the city. the difference is that they are often the exception, not the rule. so what we're trying to do is build a school where every teacher is a great teacher. >> everybody, one clap if you're with me. two claps. stomp, stomp, clap. on your marks, get set, go. >> couric: to find those teachers, vanderhoek launched a nationwide talent search that's

been called the "'american idol' of education." thousands of applicants have sent in resumes, and those who make it to the final round have to spend a day trying out in front of a very tough crowd. >> ms. black: hi, i'm ms. black. >> hi, ms. black. >> black: we're going to play one, two, three, four games as long as we can stay focused and on task. >> couric: this p.e. teacher didn't make the grade. the first class of teachers, what qualities were you looking for? >> vanderhoek: their ability to produce some evidence that the students in their classrooms move from point a to point b. >> casey ash: i say "zigga," you say "rat". zigga, rat. >> zigga, rat. >> ash: go. >> vanderhoek: in order for students to demonstrate that growth, they have to be into it. and so the teacher has to be able to engage students. >> couric: the chosen include joe carbone, a former n.b.a. trainer... >> joe carbone: jumping jacks. five reps. ready, go. one, two... >> couric: ...rhena jasey, a harvard grad who's been teaching for eight years... >> jasey: are we done? not yet.

>> couric: ...and gina galassi, an accomplished violist who teaches music. >> gina galassi: you're going to put the tip of your bow in there and use that to get your bow hold perfect. >> couric: when you first saw the ad that said the starting salary would be $125,000, what did you think? >> galassi: i thought "too good to be true." i said this is like some wacko cult or something. ( laughter ) it didn't make sense, you know. what was the... what was the catch? >> couric: the catch is with those higher salaries come higher expectations, and unlike most schools, those who don't meet vanderhoek's standards will be shown the door. >> judy lefevre: there's no contract. we're at-will. >> couric: special ed teacher judy lefevre is a 30-year classroom veteran who was making $40,000 a year when she moved from tucson to take a job at the school. >> lefevre: i think we all have a lot of trust in terms of how we feel about zeke, and if he really felt he needed to make a change, it would be in the best interests of the students here.

>> couric: the students are mostly african american and hispanic, and almost all of them come from poor families. >> "he totally..." >> couric: more than two thirds of the kids are reading below grade level when they get here, like christian pena. he'd been in the new york city school system for four years, but still couldn't read or write when he began fifth grade at tep. >> question number one. >> couric: the school's challenge is one that has bedeviled american educators for decades-- how to get poor, minority, inner city kids to achieve at the same levels as kids from more affluent neighborhoods. what makes you think you can narrow the achievement gap with this school? >> vanderhoek: the difference between a great teacher and a mediocre or poor teacher is several grade levels of achievement in a given year. a school that focuses all of its energy and its resources on fantastic teaching can bridge the achievement gap. >> 11 times 17, anybody.

11, 17. i'm going to make you smart. >> couric: can you implement a school like this on a larger scale? >> vanderhoek: absolutely. we do not take any outside money to support our teachers' salaries. >> couric: the school survives on public funding alone, and vanderhoek is able to pay his teachers well by reallocating resources. no state of the art facilities here-- classes take place in trailers. and the money that would go to pay for an assistant principal, reading specialists and other staff goes into teachers' salaries. but that means the teachers have to do those jobs, as well. >> ash: amber, on the bus, please. >> couric: casey ash teaches social studies. you're doing a lot more than teaching here. so, do you ever feel like, "well, gosh, i'm making a lot of money, but jeez, i'm doing a lot of jobs here." >> ash: that's what we signed up for. ( laughter ) >> couric: they also signed up to be continuously evaluated by vanderhoek and each other. even after the last bell, they're still at it, analyzing

teaching videos like coaches reviewing game tapes. >> the start of class is most important. that's where we sort of set the tone for the class, we set the mood, and it lets me know the temperature of the class. >> couric: skills like classroom management, getting kids settled in and ready to learn, are key. that's why this teacher uses the same routine at the beginning of each period. >> everybody, one clap if you're with me. two claps. stomp, stomp, clap. on your marks, get set, go. >> ash: the greatest benefit of working here is that it's not okay to just be okay. and every lesson does need to be laser-focused and super-sharp so that you can get the best outcomes from it. >> lefevre: it's been very humbling for me. because it's highlighted certain gaps that i had in my teaching along the way. >> couric: gaps like developing more effective lesson plans and better ways to track her students' progress.

>> lefevre: so, i had to go through a period of mourning over the teacher that i would have been if i'd gotten this kind of feedback, you know, 25 years ago. >> couric: turns out, she wasn't alone. >> heather wardwell: at the beginning of the year, i felt like i was the worst teacher. how would you say "the blue class"? >> couric: before she came to tep, heather wardwell spent most of the last 16 years teaching high school latin. >> wardwell: i wasn't prepared for the fifth grade behavior and the fifth grade mentality. i didn't feel like i was getting through to the kids and that they were learning. >> couric: but when we sat down with a group of students, they gave us their own take on tep. do you all like school? >> yes. >> couric: have you always liked school? >> no. >> not really. >> couric: how are the teachers different here from your old school? >> well, they actually care if we succeed and pass college. >> in my old school, i didn't really get that much attention and help with my class work, so i didn't do as well. here, i'm getting as and bs, because the teachers stay on top of you and they actually help you when you need help.

>> couric: what do you think makes a good teacher, gina? >> galassi: you just have to believe in the kids. and i know that they can learn. and if there's a roadblock, if they're not getting it, you know, look at me first. >> couric: you never give up. >> galassi: no. on a kid, never. >> couric: most charter schools like tep are not unionized and don't offer teachers tenure. >> vanderhoek: the idea that somebody could have a job for life no matter how they perform is not good for people in that job, much less for the students who have to suffer if that individual has gone downhill. >> couric: do you think tenure should be abolished, in general? >> vanderhoek: yes. >> couric: how difficult is it for a teacher to get tenure? >> joel klein: if you have a pulse, you get tenure. >> couric: you just have to show up? >> klein: tenure's something you get for showing up. >> couric: joel klein stepped down in january after eight years as the new york city

schools chancellor. he says that traditional public schools can't follow the tep model. vanderhoek is able to make personnel decisions based on performance, but most schools can't because of tenure. >> klein: it's virtually impossible to terminate an incompetent teacher. the process is so cumbersome that very few people will try. and so, as a result, we virtually get rid of no one for poor performance in the city. >> couric: and the unions have fought tooth and nail to keep teachers from losing their jobs, even when they have unsatisfactory ratings. they believe that tenure protects the rights of teachers and prevents them from being unjustly fired by vindictive principals. but in new york city, more teachers have died while on the payroll than have been removed for cause. over the past three years, out of 55,000 tenured teachers, only seven have been removed for poor performance. at tep, vanderhoek fired two teachers at the end of the first year. what criteria do you use when

you are deciding whether or not to retain a teacher? >> vanderhoek: is the classroom managed in a way that supports instruction? second, are the kids engaged? are they on task? and third, is there evidence that students started at point a and grew to point b? >> couric: after a rigorous evaluation process, both judy lefevre, the 30-year veteran from arizona, and heather wardwell were let go. how did you feel when you got that news? >> wardwell: i felt relieved, because i had been telling him for a while that i was struggling with balancing my life. >> couric: wardwell said she was putting in 80 to 90 hours a week at tep, twice as much as her old job. >> wardwell: i had to say no to my children often-- "no, i can't play." i'd stopped making dinner. >> couric: this sounds all consuming. >> wardwell: it was for me. but if you love teaching and you want to be in the olympics of teaching, this would be the place to do it. >> klein: these people at the equity project are demanding on

the front end as to whom they hire, and even after all of that, they're still prepared, after the first year, to say to two teachers, "this is not the right place for you." that's a very different model from the public school system. >> couric: but is the model working? when the fifth graders took the new york state math and reading exams, the results were disappointing. on average, other schools in the district scored better than tep. some people watching this might be thinking, "hey, they're paying teachers $125,000 a year. they've attracted the best and the brightest." these results don't really add up. >> vanderhoek: we don't have a magic wand. we're not going to take kids who are scoring below grade level and bring them up in a year. >> couric: you're the head of the school, the principal. why do you get to keep your job? >> vanderhoek: ultimately, to build an excellent organization is going to take time. and if that doesn't happen,

let's say four years from now, then i shouldn't keep my job. >> christian pena: "from the cupcake they were..." >> couric: but there are signs that things are moving in the right direction. >> pena: "...i call for..." >> couric: remember christian pena, who couldn't read when he got to tep? he jumped two grade levels in reading in just one year. >> "...have been a great... great moment bet... bet..." >> "between." >> pena: ..."between me and paulie." >> lefevre: good, christian. nice reading. >> welcome to the cbs sports update presented by lipitor. big ten championship ohio state is the overall number one seed in the 68 team ncaa tournament field. big 12 champion kansas is the second number one seed in the southwest region. big east regular season champ pittsburgh is the third number one seed in the southeast and defending national champion duke is the fourth number one seed

in the west region. for more sports news and information, go to cbssports.com ,,,,,,,,

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